Kimura K.K.

Can this Customer be Saved?

Group 8
Overview

● Kimura K.K. (major Japanese customer) had decided not to buy 3 additional
Spartacus machines to be delivered to and installed in its new factory in
Taiwan

● Came as a surprise to Pramtex as the price for this order was lowered by 10%
to sweeten the deal

● Suspected contract has been awarded to major competitor Singulus

Technologies

○ Perceived inferior by Pramtex

○ Mr. Kimura hinted - easier and cheaper to service and maintain

Pramtex - About the Company

● Emerging star player in optical disk

production equipment - 30% of revenues,
40% of profits High
value-
● Started out producing UV curing systems added

● Diversified into metalizers to get more profit

● Other line elements purchased from

suppliers to make whole optical disk
production line
 Strategy Competition Customers
● Concentrate on ● Pressure from other ● 2 types of customers -
emerging technologies optical disk production
○ CD and DVD
line manufacturers -
● Work in partnership replicators
Singulus
with customers that
○ Companies
were developing new ● Also offering lines
producing blank
disk formats incorporating own
media
metalizers to produce
● Successful in charging
optical disks at the ● Pramtex’s overall
a premium
lower technology end market share was 3%,
○ Advanced of the spectrum - CDs, 8% for more advanced
technologies DVDs formats of DVDs

○ Appeal to ● Pramtex concentrated ● Kimura, a major

customer on emerging disk customer - opportunity
engineers formats to stay ahead to get more business
from Sony etc.
Kimura K.K. - About the Company
● Major Japanese player in media replication and major independent optical
disk manufacturer in Japan

● Owned facilities in Japan, Korea, Taiwan, US, Mexico and France

● Originally focussed on blank media replication but eventually entered the

pre-recorded DVD market, gaining several film studio contracts

● Looked at pre-recorded DVDs as an important source of future revenue

● Production capacity:
VHS tapes/ week CDs/ week CD-Rs/ week DVDs/ week

500,000 3,000,000 800,000 500,000

● “Full-concept” production system

● Competitors: Sony and Matsushita

The First Kimura Contract
● Developed at Pramtex by Dr. Max, Spartacus was the “Rolls-Royce of turnkey
DVD production system”

● Dr. Nomura, top scientist at Kimura, convinced Mr. Kimura to order 3 machines
for the DVD factory in Japan

● If found satisfactory, additional 3 machines could be ordered for the new

Taiwan facility

● Deal with Kimura was important as it could help liaise with other potential
customers in Japan

● May 10: Signing of the first contract

Flashback: Signing the first contract
● January 12 - First Meeting in Tokyo

○ John, representative of Pramtex met with Mr. Kimura (President), Mr. Nomura (Senior
R&D advisor) and Mr. Hashimoto (Finance director)
○ Mr. Hashimoto knew less about technology but was a trusted advisor of Kimura, hence in
a position to impact the decision
○ Purpose of meeting:
■ To align expectations of Kimura from the Pramtex technology
■ Request for submission of quotation after understanding exact requirements

● January 21 - Mr. Hashimoto calls

○ Mr. Hashimoto informed John that he received better offers from other companies,
especially Pramtex’s major competitor, Singulus

○ Reiterated price was as important as technology, if not more

Flashback: Signing the first contract
● January 25 - Factory Visit

○ John visited Dr. Nomura and Dr. Komoda to take a brief of the technical specification
○ Purpose of meeting:
■ To submit the technical specifications for Spartacus to deliver an output of 15,000
DVDs a day
■ Emphasise on the importance of getting a delivery before the last week of July
■ Initiate dialogue on the Taiwan plant

● February 6 - Back to Sydney!

○ Meeting between John and Max for a status check on Spartacus

○ Spartacus was fitted with state-of-the-art technology to deliver an output of 16,000 DVDs
a day

○ Functionally superior in all aspects - touch screen interface, computer-enabled operating.

etc.
Flashback: Signing the first contract
● February 15- “Argiato” Ms Yamashita

○ Back in Japan, John stops by the Kimura K.K. headquarters to drop off a bottle of Shiraz as
a thank you token to Dr. Nomura for being so supportive of the deal.
○ John learns from Dr. Nomura’s secretary that Mr. Hashimoto is upset about the fact that
John failed to call him with a new quotation as he had requested.

● March 28 - Mr. Kimura is confused

○ Mr. Kimura expresses confusion regarding the new contract on behalf of Mr.
Hashimoto and him - they didn’t see any major change in the new contract and were
considering competitor’s products

○ Jim is worried about competitors but John assures him that Dr Nomura is on their side
Flashback: Signing the first contract
● April 19: Dr Nomura’s Confidences
○ Mr Kimura was ready to sign the contract for the first three Spartacus
○ Deadline was given emphasis on because of the Disney project which was the end of
July at the latest
○ Dr Nomura confirms competitors like Singulus, Marubeni have been very persuasive
and have given attractive offers but the president has decide to go with Pramtex even
with the high price

● May 10: “Great Job John!”

○ The contract for delivery is signed by Mr. Kimura in Sydney
○ Mr Kimura gives a lot of credit to Dr Nomura for the deal to happen

● August 9: The First Three Spartacus arrived in Japan!

○ Machines were set up in record time but there was a clear delay in shipment of the
machine - John attributed the delay to the customs office in Japan
Flashback: Signing the first contract
● August 12: The Saturday Morning Call

○ John receives a call from Dr Komoda to urgently send in some technicians as there was
a problem with one of the Spartacus machines which could not be solved in-house
○ John explained that he could only do something on Monday (after the weekend)

● August 14: “Where is Dr Scorse?” - Monday

○ Dr Komodo expected the engineers to be on their way
○ John struggles to get hold of Max as he was in some international conference
○ John contacts David Loan who tells him that only Max knows the entire project so he
would not be able to solve John’s problem
○ John reaches out to Max & Jim via mail and phone to update them about the problem
○ Dr. Komodo is visibly upset with the difference in the service being promised and the
one being given.
Flashback: Signing the first contract
● August 16 - Engineers on their way
○ John received confirmation that both the engineers will be in Osaka within a few hours
○ However Dr Komoda was not happy with the fact that he would have to wait for the
Australian engineers in order to get the replacement part
● August 17 - Engineers arrived in Japan
○ Engineers confirmed that problem was correctly identified by Dr Komoda’s engineers and
hence ordered a replacement part
○ Both of them would further be staying in Osaka till the spare part arrives and is properly
installed
○ Max had moved on to this new pet project and ensured John that he is on top of
everything and the system will work fine
● August 18 - Where is the Part ?
○ The replacement part that was ordered was not available at the warehouse
○ Fortunately, Dr Komoda was not in town for another 4-5 days
Flashback: Signing the first contract
● August 20 - Good News
○ Spare part was found and will be in Osaka before Dr Komoda
○ The equipment was up and running and exceeded expectations in terms of output and
product quality
○ John shifted his focus on the new contract with Sony and also expected Kimura to order 3
extra machines
● October 17- Dr Shariff arrives
○ Dr Shriff was in Japan to meet with Sony executives and on the same trip wished to meet
Mr Kimura regarding order of extra 3 Spartacus machines
○ Dr Nomura was not present for unknown reasons while Dr Komoda was in Germany
which also happened to be the headquarters of Pramtex main competitor
○ Issue of price was raised by Mr Hashimoto to which Dr Shariff assured that a quick
decision will be made addressing that issue
○ Upon meeting with John, Dr Shariff offered Kimura a 10c% discount if they confirmed the
order before Christmas
Flashback: Signing the first contract
● November 16 - Engineers on their way
○ John received confirmation that both the engineers will be in Osaka within a few hours
○ However Dr Komoda was not happy with the fact that he would have to wait for the
Australian engineers in order to get the replacement part
● August 17 - Engineers arrived in Japan
○ Engineers confirmed that problem was correctly identified by Dr Komoda’s engineers and
hence ordered a replacement part
○ Both of them would further be staying in Osaka till the spare part arrives and is properly
installed
○ Max had moved on to this new pet project and ensured John that he is on top of
everything and the system will work fine
● August 18 - Where is the Part ?
○ The replacement part that was ordered was not available at the warehouse
○ Fortunately, Dr Komoda was not in town for another 4-5 days
4 Decision Making Units
1
Mr. Komoda (Chief of production) 3
Mr. Kimura (President of Kimura K.K)
● Student of Dr. Nomura ● Has taken over recently from father
● He was not completely convinced ● Looked up to Hashimoto
about the technical superiority of
● Ambitious
Spartacus
● Was particular about on time
delivery

2
Dr Nomura (Senior R&D Advisor) 4
Mr. Hashimoto (Finance director)
● Studied with Dr. Max Scorse ● Old and trusted advisor
● Wanted Pramtex to get the deal ● Was all about the numbers
● Key reason for Kimura signing the
● Did not understand technology
1st Contract
● Was unhappy that Pramtex quote
was higher than competitors
Customer relationship lapses
1 No proper customer relationship is 3 Weak after-sales service
established
● The customer when faced a serious service issue,
● Kimura made the first order but it they were asked to wait till the weekend is over.
primarily happened because of personal ● They couldn’t send the engineers to solve the
relationship between Max and Nomura customers issue immediately.
who influenced the decision. ● Even after identifying the issue, the parts that are
● Max didn’t give time to understand if to be replaced are unavailable with them.
they met customer needs post purchase.

2 Less efficient communication practices 4 Real-time data updation is faltered

● There is no proactive communication ● They faltered with updating payment

internally or with the customer. data before sending mails which upset the
● The customer has to remind multiple times customer calling them unprofessional.
when they asked for a second quotation. ● Resulted in bad customer experience.
● Also, the person who can solve a ● No well-trained customer communication
customers issue couldn’t be identified and practices.
reached easily even within the
organisation.
 CME framework

After 1st contract-

Pramtex expectation

Kimura to become MVC

Position Pramtex
on the Continued support from Nomura
expectation
loyalty Reality
ladder
^ Kimura switched to competitors due to poor
|
relationship and after sales service

Reality Relationship Nomura was not ready to back Pramtex after the
begins
mess
Cost of Management effort ->
Alternative strategies
Reduce price to match competitors offerings Improve customer service to justify premium price

Pros: Pros:

● Due to Pramtex’s superior technology and ● It helps in improving the overall brand image.
reduced price, it would have an overall better ● Improving customer service increases interactions
performance. with customers and gives an overall positive
● It eliminates the skepticism associated with customer experience.
its premium pricing for some customers. ● Long-term relationships are formed with
customers with increased loyalty.
Cons:
Cons:
● But it results in a loss of its dominant market
share and total revenue. ● It will take considerable amount of time and
● Lowering the product price would falter with resources for such development.
its brand positioning as a high-end brand and ● If Pramtex operates solely to improve customer
brand image of a premium product. experience, innovation may slow down.
Recommendations
● It is more logical for Pramtex to choose the second alternative i.e. to justify the
premium price with superior customer service.

● It is aligned with its brand positioning and superior innovation focus.

● Pramtex should monitor the process of how a strategic relationship could be

established, and working step-by-step on it to establish standardized process across the
organization.

● In the short term, it has to create a highly technical team available to customers all the
time in case of an issue from the customer’s side.

● As a long term solution, training more employees to improve efficient communication,

working attitude with customer focus and less errors has to be targeted to gain long-term
strategic relationships with their customers.
Thank you.